Superior AI stock: SoundHound AI vs. C3.ai
Both companies have achieved success with their AI solutions, but one appears to be a more promising long-term investment.
Both companies have achieved success with their AI solutions, but one appears to be a more promising long-term investment. Artificial intelligence (AI) has become mainstream, driving significant gains in many tech stocks, notably Nvidia, a leader in AI semiconductor chips. There's ample opportunity to invest in AI's secular trend, as the market is still developing. Projections indicate substantial growth in the AI industry, expanding from $136 billion in 2023 to an estimated $827 billion by 2030. Two compelling AI firms for potential investment are SoundHound AI (SOUN -1.40%) and C3.ai (AI -1.45%), chosen not solely for their namesake but for their robust revenue growth driven by increasing AI adoption among customers. However, determining which company is the superior investment to capitalize on AI's prolonged industry growth requires a closer examination of each.
Advantages of SoundHound AI
SoundHound specializes in AI solutions focused on speech recognition, utilized in customer service calls, drive-thru food orders, and voice commands in vehicles.
The company boasts an impressive client roster including Chipotle, Jersey Mike's, Hyundai, and Stellantis (owner of Chrysler), showcasing its technology's versatility across industries. SoundHound's voice platform supports 25 languages, enhancing its revenue potential globally.
In the first quarter, all geographic regions where SoundHound operates reported significant year-over-year revenue growth, underscoring its robust market presence and growth trajectory.
| Region | 2024 Q1 revenue | YOY change |
|---|---|---|
| Americas | $3.7 million | 375% |
| Europe, Middle East, and Africa (EMEA) | $3.4 million | 26% |
| Asia | $4.5 million | 39% |
| Total | $11.6 million | 73% |
SoundHound achieved significant year-over-year sales growth in the Americas region primarily because of its acquisition of SYNQ3, a voice AI business specializing in the restaurant industry.
The company's impressive 73% increase in sales in Q1 2024 indicates a robust start to the year, with expectations for continued strong performance throughout 2024. SoundHound forecasts full-year revenue for 2024 to reach at least $65 million, a substantial increase from 2023's $45.9 million, partly driven by the SYNQ3 acquisition.
Advantages of Investing in C3.ai
C3.ai assists organizations in integrating artificial intelligence through a range of customizable and pre-built AI software solutions. These applications address diverse business needs, such as fraud detection in banking and energy management for utilities.
Similar to SoundHound, C3.ai has achieved impressive year-over-year revenue growth driven by clients like Shell, Consolidated Edison, and various U.S. government agencies. In its fiscal year ending April 30, 2024, the company reported a 16% increase in sales to $310.6 million from $266.8 million the previous year.
C3.ai's federal business revenue more than doubled in fiscal 2024 compared to the prior year, with notable contracts including the U.S. Air Force utilizing its software for predictive maintenance of aircraft.
With strong momentum from fiscal 2024, C3.ai anticipates continued revenue growth into fiscal 2025, projecting sales to reach at least $370 million, marking another year of double-digit revenue expansion.
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